Kansallis Finance Ltd. v. Fern, 659 N.E.2d 731 (Mass. 1996)

Facts

Jones was a partner in a law firm who drafted an opinion letter.  Jones did not sign the letter (he had a third party sign) but it was found that Jones adopted or ratified the letter.  Jones was later convicted on criminal charges but the Plaintiff was unable to collect the $800,000 judgment.  Plaintiff then sued the other partners in the firm.

Procedural History

Both the judge and jury found the defendants were not liable for Jones’ conduct.  The Court of Appeals affirmed and certified a question to the Massachusetts Supreme Court.

Issue(s)

To find that an act is within the scope of the partnership, must it be shown that that the act was taken at least in part with the intent to serve or benefit the partnership?

Holding(s)

Yes.

Reasoning/Analysis

The Court found that in the context of a partnership, the persons usually stand on equal footing but with the law on vicarious liability, the actor was often in a subordinate position.  The jury found that Jones acted without actual or apparent authority.  There are two routes where vicarious liability may be found: (1) if the partner has apparent authority or (2) if there is no apparent authority, there may be vicarious liability on the alternate ground requiring intent to benefit the partnership.  There is no evidence that Jones was acting to benefit the partnership.

Judgment/Outcome

The Court found the jury instructions to be correct.